1980 PLP (Trib (PTD)

"In spite of proper service none appeared. Heard the D. R., Proceeded ex parte against the appellant. For order." Consequently the Tribunal passed an ex parte order on merits and dismissed the appeals of the assessee. It is in this background that an application under section 35 was made for recalling the order. The precise point taken by the appellant in the application under section 35 was that he had filed an affidavit against which no counter‑affidavit had been filed on behalf of the I. T. O. but this fact had not been considered or mentioned in the body of the order. Certain documents and register were summoned by the Tribunal but there was no mention in the order as to the production or perusal of the documents and the register. It was also requested that since the ex parte order had been passed by the Tribunal in absentia without resorting to these facts the order might be recalled and the facts corrected.

3. Under section 5‑A, subsection (7) of the Income‑tax Act the points of difference of opinion have to be referred to a third Member. However no specific points have been referred to me for my opinion. Therefore I feel it proper to formulate the real points of difference of opinion which are: "(1) Whether under section 35 of the Income‑tax Act an ex parte order passed by the Tribunal can be re‑called. (2) Whether in the facts and circumstances of this case section 35 is attracted and there is a mistake on the face of the record. (3) Whether an ex parte order was at all justified. (4) Whether the order passed by the Tribunal on 10‑10‑1975 was really on merits."

4. First of all I would discuss the scope of section

35. A perusal of this section shows that any mistake apparent from the face of the records can be rectified by the authority who had passed the order. Now the words apparent from the facts of the records have to be distinguished from a similar phraseology used in other enactments, i.e. mistake apparent on the face of the order or on the face of the records. The words 'apparent from the face of the records' imply that the authority concerned has to look into the records and if some mistake is discovered then section 35 is attracted and such a mistake can be rectified. Obviously this does not mean that an elaborate enquiry is to be adduced. But where there is an omission or certain piece of evidence or a specific ground, has escaped consideration or there is an obvious mistake of calculation etc., the authority concerned is entitled to rectify the mistake. It may be pertinent to note that section 3 not only gives a right to a party to the proceedings to move the authority concerned but also empowers the authority concerned itself to rectify the mistake on its own motion. It therefore follows that even if no motion is made to point out the mistake, the authority concerned can do so on its own motion if it comes to its notice. The source of information pointing out the mistake is therefore immaterial. What is important is that there should be a mistake which is apparent from the face of the records. In the case reported as 41 I. T. R. 732 which has been followed in subsequent case of Pakistan Rivers Steamers Ltd. v. C.1. T., Dacca (1971 P T D 204), it has been held that the I. T. O. under section 35 of the Income‑tax Act has power by examine the records and if he discovers that he had made a mistake he can rectify the error which may be an error of fact or an error of law. Now applying the above principle on the facts of the present case there is one obvious omission which is apparent from the records namely the non‑consideration of affidavit of the appellant. Apart from the fact that material evidence had escaped the notice of the Tribunal while passing an ex parte order this evidence in fact was the hinging point and its consideration might have changed the whole complexion of the case. To say that an affidavit is an‑evidence does not need any argument. In the facts of the present case the sole point for consideration was as to whether the appellant had filed an application for registration or not. His case throughout had been that the application had been filed which accord ing to the I. T. O. was not available on record. Before the Tribunal, in the grounds of appeal, as quoted above, a specific plea was specifically mentioned that the application for registration was registered at Serial No.

136. The Tribunal vide its order dated 24‑9‑1975 did take into considera tion this fact and called for 26‑A Register and counter‑affidavit of the I. T. O. Neither the counter‑affidavit nor the register was produced on 10‑10‑1975 for which purpose along the case had been adjourned. Even if the Tribunal chose to proceed exparte it was bound to take into consi deration. On the adjourned date, notwithstanding the absence of the assessee or his A. S. the Tribunal could proceed with the case only in two ways: (1) It could further adjourn the case for filing of counter -affidavit and for production of the Register giving further time to the Department or (2) the Tribunal could draw an adverse inference against the department because of non‑filing of the counter‑affidavit and non‑production of 26‑A Register. The order of the Tribunal which is purported to be an, order of the Tribunal which is purported to be an order on merits cannot be regarded an order on merits when the sole point urged by the assessee and supported by an affidavit had not been taken into consideration. Therefore the argument that since this is an order on merits and therefore cannot be recalled loses all force. Any mistake which is apparent from H the records and goes to the very root of the case and if rectified could change the fate of the case and could in fact reverse the view taken earlier, would certainly be a mistake as envisaged under section

35. There fore if such a mistake is discovered the Tribunal is not only competent but bound to recall its earlier order. In this connection the learned A. R. had, relied upon another decision of the Tribunal given in Miscellaneous Application No. 46 of 1973‑

74. In re : I. T. A. No. 5256 of 1973‑

74. In that case the Tribunal decided the appeal without considering the affidavit which had bearing on various issues raised before the Tribunal. While the Reference was pending before the High Court an application under section 35 was moved before the Tribunal for re‑calling its earlier order which had been passed without consideration of evidence on record. The Tribunal made the following order: "We would direct that as these orders were passed without considering the affidavit filed the decision apparently suffered from manifest errors inasmuch as certain material that should have been considered was lost sight of. In these circumstances we re‑call the orders for fresh adjudication and the appeals are directed to be reheard afresh e ‑calling the earlier orders." The facts of that case were similar to the facts of the present case. The facts of the present case are rather on better footing inasmuch as the Tribunal did apply its mind to the affidavit and directed for filing of counter‑affidavit but still the Tribunal did not consider the affidavit nor it took note of absence of the counter‑affidavit. Though it had already ordered for it. The mere absence of a party does not entitle the Tribunal while passing ex pane order to ignore the points raised before it or material evidence an record.

5. Now I take up the point raised by my learned brother, the Accountant Member that the application was incompetently filed and therefore .could not be taken note of: It may be pointed out here a fact which had escaped the notice of both the learned members (who bad differed in their opinion) that the first application under section 35 for rectification of mistake was filed on 8‑11‑1975 which was withdrawn by the A. R. on 24‑3‑1976. The present application dated 17‑4‑1976 is the second application. It is correct that this application has been signed, by a person who is not authorised to sign the same. However the fact remains that the factum of non‑consideration of certain evidence is there. The question therefore arises if a mistake which is apparent from the record is brought to the notice of the Tribunal can it be allowed to perpetuate on the sole ground that the person who had brought the mistake to the notice of the Tribunal is not competent to do so. The obvious answer is No. Once a mistake if it is a mistake apparent from the records within the meaning of section 35 is brought to the notice of the Tribunal, it is duty bound to rectify it. The. Courts and the Tribunals owe their, existence to administer justice. Therefore once it is settled that there has been a mistake which is apparent from the record, the Tribunal is not only entitled but is bound to rectify it notwithstanding the fact that the application moved was incompetently moved. Now take the case from another angle. Subsequently while Miscellaneous Application proceedings were pending, 26‑A Register had been produced before the Tribunal. This register does support the contention of the assessee in as much as at Serial No. 136 of 26‑A Register of Cir . . . . there is an entry of 26‑A application of the assessee. The relevant entry records as below :‑-- "136 19‑10‑1969. Messrs Sher Muhammad Bhatti &, Co. C/Agents, Sumundri.

1. Sher Muhammad.

2. Ali Muhammad.

3. Mushtaq Ahmad.

4. Nasiruddin. Application for registration under section 26‑A for 1970‑71 alongwith copy of partnership deed executed on 13‑11‑1969. (Sd.)I. T. O. 19‑11‑1969." While deciding the case ex pane the Tribunal gave the following finding. "In view of the I. T. O.'s clear finding about non‑availability of any entry of the appellant's registration application in 26‑A Register, we do not find any justification for disagreeing with this conclusive finding of fact." Now after seeing the 26‑A Register which supports the contention of the assessee how far the finding of the Tribunal given above could remain intact. Despite this discovery will it not be an absolute injustice to the assessee that he should be penalised only because of non‑appearance of his A. R. on a particular date. If the order of the Tribunal dated 10‑19‑1975 is allotted to remain as such it would amount to perpetuating the mistake committed by it in not considering the evidence on record in spite of the finding of fact arrived at by the Tribunal to be patently incorrect. My learned brother the A.M. discussing the scope of section 35 has relied on a number of case law cited by him. As far as two cases namely P L D 1976 Kar. 286 and P L D 1967 Lah. 33 quoted try him I regret that I could not take advantage of these cases as the first cited case has no relevancy as it relates to some labour dispute. The second case reported as P L D 1967 Lah. 33 is not available on that page. Perhaps this is a typographical mistake. The other cases cited by him in fact support the view which I have taken above and do not contribute to the view taken by him. The most important and the latest case which has also been relied upon by the learned A.M. is the case of C. I. T., Rawalpindi v. Wolf Gauz Matzke ((1975) 32 Taxation 176). The question in trot case was us to whether the Tribunal was entitled to set aside its own order by which an appeal had been dismissed ex parse for default of appearance. In that case the Tribunal had rejected the telegraphic request for adjournment from the respondent‑assessee on the ground that he was ill. The Tribunal rejected the prayer for adjournment and proceeded with the hearing of the appeal ex-parte and dismissed it. Subsequently sufficient cause was shown to the Tribunal for setting aside the ex parse order and the Tribunal set aside the ex parte order. The following question of law was referred to the High Court for its opinion;‑-- "Whether in the facts and circumstances of the case and in absence of any provision in the Income‑tax Act, 1922 and Income‑tax Appellate Tribunal Rules 1948 the Tribunal had rightly held that it has in the rent jurisdiction to set aside ex parse order passed by it." The High Court after making an elaborate discussion answered the question in the affirmative. The learned A.M. was not correct while discussing that case that the facts of that case were different and do not apply to the present case. According to the learned A.M. the appeal had been dismissed for default of notices which were finally found as not having been actually served. As stated above in that case service had been effected and what was rejected was the request for adjournment on the ground of illness. In any case the principle remains the same. The precise moot point is as to whether an ex parte order passed by the Tribunal could be re‑called or not. The Peshawar High Court in the case cited above held that the Tribunal has inherent powers to re‑call its orders passed ex parse. This is altogether a different matter as to what is a sufficient cause. It is for the tribunal to see in a particular case as to whether it is satisfied and in the circumstances of the case sufficient cause leas been shown or not. Another case relied upon by the learned A.M. is P L D 1967 Lah,

353. In that case the Tribunal while deciding tyre case had ignored the material piece of evidence which was the main factor for influencing the judgment appealed against. It was held by the High Court that it was a case of non‑consideration of material evidence and therefore the Reference was accepted. In the present case as well the material evidence had not been considered which might have changed the fate of the case. Therefore that case also supports the view which I have taken above. The learned A.M s view that all the material evidence had been taken into consideration and that there is no affidavit to challenge the finding of the Tribunal is obliviously not correct. As stated above the affidavit filed by the assessee had not been taken into consideration by the Tribunal. In the facts and circum stances of the case the assessee could produce no evidence except to file his affidavit as the records containing the receipt of the application and the application itself was in the possession of the department. The assessee from the very beginning had been agitating that he had filed an application for registration. It was also the sole point urged before the Tribunal. However this very point was not considered. In the presence of the affidavit already on record, there was not need of filing another affidavit as there was nothing further to controvert. His earlier affidavit was on the file but was not considered by the Tribunal at all. There could be no two opinions about the view taken by the learned A.M. that the finality of Tribunal's order should not be undermined by re‑calling orders for re‑hearing of the same fact which had already been adjudicated upon. However, the grievance in this case is that the real point in issue has not been adjudicated upon. The assessee had specifically urged that an applicat ion for registration had been filed which was entered at Serial No. 136 in 26‑A Register. Now there is no finding on this point. Therefore there is no question of earlier adjudication on this point. The discussion made by the learned A.M. under the heading Order of the Tribunal based on merits and facts' is all irrelevant for the purposes of disposal of this application. The learned A.M. has discussed at length as to why the registration should not be granted to the assessee and thereby supporting the order of the I. T. O. and ultimately supplementing the order passed by the Tribunal itself. Now the issue before the Tribunal is about the maintainability of application under section 35 and whether the order passed by the Tribunal earlier should be re‑called or not. Once it is decided that the earlier order should be re‑called naturally the case would be re‑heard and all the discussion made by the learned A.M. would be relevant only at the time of deciding the appeal. As a matter of fact discussing this case on merits impliedly grants application under section 35 inasmuch as the learned A.M. has supplemented the earlier order while himself holding that the Tribunal is functus officio after passing the order.

6. Before parting with the judgment I would quote certain cases (Not relied upon by the A. R.) in which the High Courts have expressed their views tin the issue involved in the present case. Mangat Ram Kuthiala and others v. C. I. T., Punjab and another ((1960) 38 I T R 1). In this case their Lordships held as under :‑

"Now it is a settled rule that a judicial Tribunal can re‑call and quash its own order in exceptional and rare cases when it is shown that it was obtained by fraud or by palpable mistake or was made in utter ignorance of a statutory provision and the like. The learned Advocate‑General does not admit that the same rule applies in the case of quasi‑judicial tribunals. It appears to me that his emphasis is on the class of tribunal ignoring the nature of proceedings. The rule has bearing upon the nature of proceedings and not necessarily on the class of the tribunal. It is the judicial proceedings in which such a rule is made applicable. If the judicial proceedings are before a tribunal like a Court it is a judicial tribunal and if they are before an administrative tribunal it is a quasi judicial tribunal. It appears to me that for the application of the rule the class of the Tribunal is not a material matter but what is of substance and material is the nature of the proceedings before the tribunal. If the proceedings are in the nature of judicial proceedings then irrespective of the class of the tribunal, the rule will apply, and if an orders has been obtained from or has been made by a judicial or a quasi‑judicial tribunal because of practice of fraud, or because of palpable mistake, or because of ignorance of clear statutory provision and the like, it has inherent power to re‑call such an order, quash it, and make an order on merits and according to law in the ends of justice."

7. Admittedly the proceedings before this Tribunal are judicial proceed ings and the Appellate Tribunal is a judicial Tribunal and therefore the rule quoted above is fully applicable. Inland Navigation Co. Ltd. Chittagong v. The I. T. O., Chittagong (1968 P T D 257). In this case it was held as follows: "Whether the original assessment was made overlooking the income from one branch though the assessee did show the income from that branch in the statement this amounted to a mistake apparent from record and therefore the I. T. O. was entitled to rectify the mistake under section 35." In the case C. I. T. Bombay v. Hazari Mat Nagjee & Co. ((1962) 46 I T R 1168) it has been held that the powers of the Appellate Tribunal are similar to the powers of civil Courts under the Civil Procedure Code. In the light of the above discussion I am in agreement with the learned J. M. and feel that the order passed by the Tribunal on 10‑10‑1975 did not consider the material facts on record and this is a mistake apparent from the face of the record and therefore that order can be re‑called and the appeals decided on merits.

8. In the result the order passed by the Tribunal on 10‑10‑1975 should be re‑called with the direction that the appeals be re‑fixed for hearing again in due course. All the five Miscellaneous Applications should thus succeed. As per majority judgment orders passed by the Tribunal on 10‑10‑1975 are re‑called and the appeals are directed to be fixed for re‑hearing on merit.